Fine words butter no parsnips: remedying a material breach
15 May 2020
Arunvill had hired Bains as a consultant, with the specific services to be provided largely left at Bains’ discretion. A dispute arose as to whether Arunvill would pay Bains a bonus, profit share and certain expenses. In response, Bains refused to do any further work for Arunvill until he had received payment.
Bains’ refusal to work amounted to a material breach of the parties’ consultancy agreement, under which Bains (once notified) had 21 days to remedy the breach. Non-remedy would result in the repudiation of the contract giving Arunvill the right to stop further payment. Within the 21-day period, Bains sent a letter stating that he intended to perform his contractual obligations but did not commence work.
The question on appeal was: did this remedy the material breach? Answer: it did not.
The Court of Appeal found that Bains had gone further than merely threatening to stop work, which could have been resolved by withdrawing the threat. Instead, Bains created a state of affairs by actually stopping work, the only remedy was for which was to start again within 21 days. The court had to identify (i) the specific material breach; and (ii) the matching remedy. An unfulfilled promise to resume action was no more than a piece of paper.
However, the court noted that Bains’ obligation to work was freestanding, rather than requiring Arunvill’s input. Had contractual performance required instruction from Arunvill, then a promise to obey those instructions once received may have remedied the breach.